Bitcoin price has been drawing sideways in a narrowing range for over a week. The market will soon become frustrated with its inability to make new highs or lows, and this is the perfect setup for a strong directional move.
Bitcoin Price Analysis
Time of analysis: 04h52 UTC
Bitstamp 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
Price is currently beneath both the 20MA and 200MA in the hourly chart, across exchanges. In the 4-hour and 1-day charts price is trading below the 20MA but above the 200MA, and at all the above mentioned timeframes price is consolidating to the 20MA – forming candles just below it.
Our momentum indicators (RSI and MACD) are positioned in the middle of their ranges in the 1-hour, 4-hour and 1-day charts.
Given all the above conditions we can conclude that there is a price consolidation underway at the larger degree of trend. Whether it will still unfold price swings outside of the last week’s $10 range, remains to be seen and we cannot make confident assumptions about that.
A reiteration of our outlook and trading plan is as follows:
What we expect to see is based on the tendency of price to consolidate prior to a larger trending move: once the consolidation has built enough pressure price should break out of its consolidation range. It may do so rapidly, or it may slowly begin to rise as buyers cautiously join the advance. In the event that the majority of the market (or the largest players) want to trade price down, we could expect the typical Bitcoin flash crash to the nearest support level, and there are a few between $250 and $270.
As per our trading rule, we don’t anticipate the market’s next move, but wait for the chart to give us a technical signal. In this case, for price to advance above both the 20MA and 200MA and for the 20MA to cross above the 200MA as part of (and in addition to) the defined xbt.social buy signal (see Trade Signals and Trade Recommendations)
In case of a price drop, we will probably forego the initial wave down – since it will lack defined parameters and represents more risk than reward. Subsequent decline may present trade opportunities, but for now we have our trigger fingers ready and our eyes trained on advance. Remain patient for the signal.
To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate. – Jesse Livermore
It would be useful and profitable to recover that crystal ball that tragically rolled overboard a few summers ago. In the meantime we have to read the chart and market mood for clues about direction. At the moment there is only technical confirmation of a consolidation to be followed by a larger trending move. Its direction is unclear, but global economic events suggest that Bitcoin’s price valuation is about to increase due to speculation about US rates increases and, therefore, international central bank policy shifts. The implied effects on global markets will generate the requisite fear and uncertainty that favors a commodity money price rally.
Bitfinex orderbook depth and Buy/Sell Volume:
What do readers think? Please comment below.
Readers can follow Bitcoin price analysis updates every day on CCN.LA. A Global Economic Outlook report is published every Monday.
The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Bitcoin price charts from TradingView.
Image from Shutterstock.